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EXHIBIT 10.1
ASSET PURCHASE AGREEMENT
BETWEEN
INNUITY, INC.
AND
CREDITDISCOVERY, LLC
NOVEMBER 8, 2006
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TABLE OF CONTENTS
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1. Definitions
..........................................................
1
2. Basic Transaction
.................................................... 5
2.1 Purchase and Sale of Assets
..................................... 5
2.2 No Assumption of Liabilities
.................................... 5
2.3 Purchase Price
.................................................. 5
2.4 The Closing
..................................................... 5
2.5 Allocation
...................................................... 5
3. Representations and Warranties of the Seller
......................... 5
3.1 Organization, Qualification and
Power ........................... 6
3.2 Authorization of Transaction
.................................... 6
3.3 Noncontravention
................................................ 6
3.4 Brokers' Fees
................................................... 6
3.5 Title to Assets
................................................. 6
3.6 Members; Subsidiaries
........................................... 7
3.7 Financial Statements
............................................ 7
3.8 Events Subsequent to Most Recent
Fiscal Year End ................ 7
3.9 Undisclosed Liabilities
......................................... 7
3.10 Tax Matters
..................................................... 7
3.11 Real
Property ...................................................
8
3.12
Intellectual Property ...........................................
8
3.13 Tangible
Assets .................................................
11
3.14 Contracts
.......................................................
11
3.15 Insurance
.......................................................
12
3.16 Legal
Compliance; Litigation ....................................
12
3.17 Employment
Matters .............................................. 13
3.18 Employee
Benefits ...............................................
13
3.19
Environmental ...................................................
13
3.20 Certain
Business Relationships with the Seller ..................
13
3.21 Securities
Representations ...................................... 13
3.22 Other
Information ...............................................
15
4. Representations and Warranties of the Buyer
.......................... 15
4.1 Organization of the Buyer
....................................... 15
4.2 Authorization of Transaction
.................................... 16
4.3 SEC Documents
................................................... 16
5. Covenants
............................................................
16
5.1 General
.........................................................
16
5.2 Notices and Consents
............................................ 16
5.3 Litigation Support
.............................................. 16
5.4 Transition
...................................................... 17
5.5 Confidentiality
................................................. 17
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5.6 Covenant Not to Compete
......................................... 17
5.7 Nonsolicitation; Non-Hire and
Noninterference ................... 18
6. Conditions to Obligations to Close
................................... 18
6.1 Conditions to Obligations of the
Buyer .......................... 18
6.2 Conditions to Obligation of the
Seller .......................... 20
7. Remedies for Breaches of this Agreement
.............................. 21
7.1 Survival of Representations,
Warranties and Covenants ........... 21
7.2 Indemnification Provisions for
Benefit of the Buyer ............. 21
7.3 Indemnification Provisions for
Benefit of the Seller ............ 22
7.4 Matters Involving Third Parties
................................. 22
7.5 Adjustment to Purchase Price
.................................... 24
7.6 Recoupment Against Innuity Stock
................................ 24
7.7 Other Indemnification Provisions
................................ 24
8. Termination
..........................................................
24
8.1 Termination of Agreement
........................................ 24
8.2 Effect of Termination
........................................... 25
9. Miscellaneous
........................................................
25
9.1 Press Releases and Public
Announcements ......................... 25
9.2 No Third-Party Beneficiaries
.................................... 25
9.3 Entire Agreement
................................................ 25
9.4 Succession and Assignment
....................................... 26
9.5 Counterparts and Facsimile
Signatures ........................... 26
9.6 Governing Law
................................................... 26
9.7 Amendments and Waivers
.......................................... 26
9.8 Severability
.................................................... 26
9.9 Expenses
........................................................
26
9.10
Construction ....................................................
26
9.11
Incorporation of Exhibits and Schedules .........................
27
9.12 Notices
.........................................................
27
9.13 Specific
Performance ............................................
28
9.14 Submission
to Jurisdiction ...................................... 28
9.15 Special
Meeting; Agreement to Vote Membership Interests; Proxy ..
28
</TABLE>
EXHIBITS
Exhibit A - Registration Rights Agreement
SCHEDULES
Schedule 1(a) -Acquired Assets
Seller's Disclosure Schedule
Buyer's Disclosure Schedule
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ASSET PURCHASE AGREEMENT
This
Asset Purchase Agreement (this "AGREEMENT") between Innuity, Inc.,
a
Utah corporation (the "BUYER") and Creditdiscovery, LLC, a Nevada
limited
liability company (the "SELLER") and each of Randall L. Sargent and
Ralph H.
Smith with respect to Sections 9.1 and 9.15 of this Agreement
(each, a "MEMBER,"
and collectively, the "MEMBERS"), takes effect on November 8, 2006.
The Buyer
and the Seller are each individually referred to as a "PARTY," and
collectively
as the "PARTIES."
RECITAL
The
Seller desires to sell, transfer and otherwise convey, and the
Buyer
desires to purchase and assume, all of the assets of the Seller, on
the terms
and subject to the conditions of this Agreement.
AGREEMENT
In
consideration of the above recital and the promises set forth in
this
Agreement, the Parties agree as follows:
1.
DEFINITIONS.
"ACQUIRED ASSETS" means all right, title and interest in, to and
under all
of
the assets of the Seller (other than the Excluded Assets),
including
those assets of the Seller set forth on SCHEDULE 1(A) of this
Agreement.
The Acquired Assets
include all of the assets necessary to conduct the
businesses of the Seller as currently conducted and as currently
proposed
to
be conducted, including all of the following types of assets:
(a)
tangible personal property, including equipment, furniture,
computer
hardware, data center hardware and related inventories of supplies
and
spare parts; (b) Intellectual Property, associated goodwill,
licenses and
sublicenses (including all software licenses and sublicenses),
remedies
against infringements, and rights to protection of interests under
any Law,
including the Software and the rights to the use of the name
"Creditdiscovery," and any other trade names used by the Seller or
any
derivations thereof; (c) agreements, including all customer,
service and
partnership contracts and other third party agreements,
instruments,
Security Interests, guaranties and other similar arrangements; (d)
claims,
deposits, prepayments, refunds, causes of action, choses in action,
rights
of
recovery, rights of set off and rights of recoupment; (e) permits;
(f)
books, records, ledgers, files, documents, correspondence, lists,
drawings
and
specifications, creative materials, advertising and promotional
materials, studies, reports and other printed or written materials;
(g)
current telephone and facsimile numbers, e-mail addresses, uniform
resource
locators, domain names and websites and the listings for each; and
(h) all
goodwill and general intangibles associated with the Seller and
its
business as conducted and as currently proposed to be
conducted.
"ADVERSE CONSEQUENCES" means all actions, suits, proceedings,
hearings,
investigations, charges, complaints, claims, demands,
injunctions,
judgments, orders, decrees, rulings, damages, dues, penalties,
fines,
costs, amounts paid in settlement, Liabilities, obligations,
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Taxes, liens, losses, expenses and fees, including court costs
and
reasonable attorneys' fees and expenses.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the
regulations
promulgated under the Securities Exchange Act.
"ASSUMED LIABILITIES" means any Liabilities of the Seller assumed
by the
Buyer between September 6, 2006 and the date of this Agreement
under that
certain term sheet executed by the Buyer, the Seller and Acquirint,
LLC
dated September 6, 2006.
"BUYER PARTIES" means the Buyer and its officers, directors,
employees,
stockholders, agents and Affiliates.
"CODE" means the Internal Revenue Code of 1986, as amended.
"CONFIDENTIAL INFORMATION" means any information concerning the
business
and
affairs of the Seller that is not already generally available to
the
public.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as
amended.
"EXCLUDED ASSETS" means each of the following of the Seller: (a)
the
limited liability company organizational documents, qualifications
to
conduct business as a foreign limited liability company,
arrangements with
registered agents relating to foreign qualifications, taxpayer and
other
identification numbers, seals, minute books, membership interest
transfer
books and other documents relating to the organization, maintenance
and
existence of the Seller as a limited liability company, post-office
boxes;
(b)
any of the rights of the Seller under this Agreement (or under any
side
agreement between the Seller
and the Buyer entered into on or after the
date
of this Agreement); and (c) the cash of the Seller.
"GOVERNMENTAL AUTHORITY" means (a) any federal, state, local or
foreign
governmental, administrative or regulatory authority, court, agency
or
body, or any division or subdivision, or (b) any arbitration
board,
tribunal or mediator.
"INNUITY STOCK" means the common stock of the Buyer.
"INTELLECTUAL PROPERTY" means: (a) all inventions (whether
patentable or
unpatentable and whether or not reduced to practice), all
improvements, and
all
patents, patent applications and patent disclosures, together with
all
reissuances, continuations, continuations-in-part, revisions,
extensions
and reexaminations;
(b) all trademarks, service marks, trade dress, logos,
trade names and corporate names, together with all
translations,
adaptations, derivations and combinations and including all
associated
goodwill, and all applications, registrations and renewals; (c)
all
copyrightable works, all copyrights and all applications,
registrations and
renewals; (d) all mask works and all applications, registrations
and
renewals in connection therewith; (e) all trade secrets and
confidential
business information (including ideas, research and development,
know-how,
formulas, compositions, manufacturing and production processes
and
techniques, technical data, designs, drawings, specifications,
customer and
supplier lists,
pricing and
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cost
information, and business and marketing plans and proposals); (f)
all
computer software (including data and related documentation); (g)
all other
proprietary rights; and (h) all copies and tangible embodiments
(in
whatever form or medium).
"KNOWLEDGE" means actual knowledge after reasonable investigation
and
knowledge that could have been obtained through reasonable
inquiry.
"LAW" means any federal, state, local or foreign constitution, law,
code,
plan, statute, rule, regulation, ordinance, order, writ,
injunction,
ruling, judgment, decree, charge, restriction or Permit of any
Governmental
Authority, each as amended and in effect, now or in the future.
"LIABILITY" means any liability (whether known or unknown, whether
asserted
or
unasserted, whether absolute or contingent, whether accrued or
unaccrued, whether liquidated or unliquidated, and whether due or
to become
due), including any liability for Taxes.
"MATERIAL ADVERSE EFFECT" means any adverse financial or
business
consequence (or any development that could reasonably be expected
to have
an
adverse financial or business consequence) on the Business, the
Acquired
Assets, the condition (financial or otherwise), the results of
operations
or
prospects of the Business or on the ability of the Seller to
satisfy its
obligations under this Agreement, other than consequences relating
to or
arising from (i) a mutually agreed to public announcement of the
existence
(but
not the terms or provisions) of this Agreement, (ii) economic
conditions generally, or (iii) events or circumstances that affect
the
Business in the same manner and to the same extent as other
businesses in
the
industry generally.
"MOST RECENT BALANCE SHEET" means the balance sheet contained
within the
Most
Recent Financial Statements.
"OPERATING AGREEMENT" means the operating agreement of the
Seller
originally executed on October 31, 2001, as amended.
"ORDINARY COURSE OF BUSINESS" means the conduct of business in a
manner
consistent with the past custom and practice of the Seller and
its
Affiliates (including
with respect to quantity and frequency).
"PERMITS" means any permits, authorizations, approvals, decisions,
zoning
orders, franchises, registrations, licenses, filings,
certificates,
variances or similar rights granted by or obtained from any
Governmental
Authority.
"PERSON" means an individual, a partnership, a limited liability
company, a
corporation, an association, a joint stock company, a trust, a
joint
venture, an unincorporated organization or a Governmental
Authority.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement
between the Buyer and the Seller to be executed at the Closing, the
form of
which is set forth on Exhibit A of this Agreement.
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"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of
1934, as
amended.
"SECURITY INTEREST" means any mortgage, pledge, lien, encumbrance,
charge
or
other security interest, other than: (a) mechanic's, materialmen's
and
similar liens that are being contested in good faith and for which
the
particular entity has provided adequate reserves; (b) liens for
Taxes not
yet
due and payable or for Taxes that the taxpayer is contesting in
good
faith through appropriate proceedings and for which the taxpayer
has
provided adequate reserves; (c) purchase money liens and liens
securing
rental payments under capital lease arrangements; and (d) other
liens
arising in the Ordinary Course of Business and not incurred in
connection
with
the borrowing of money.
"SOFTWARE" means the Seller's proprietary software technology,
products and
associated documentation, as further described on SCHEDULE 1(A) of
this
Agreement.
"SPECIAL MEETINGS" has the meaning set forth in Section 9.15 of
this
Agreement.
"TAX" means any federal, state, local, or foreign income, gross
receipts,
license, payroll, employment, excise, severance, stamp,
occupation,
premium, windfall profits, environmental (including taxes under
Code
Section 59A), customs duties, capital stock, franchise,
profits,
withholding, social security (or similar), unemployment,
disability, real
property, personal property, sales, use, transfer, registration,
value
added, alternative or add-on minimum, estimated, or other tax of
any kind
whatsoever, including any interest, penalty, or addition, whether
disputed
or
not.
"TAX
RETURN" means any return, declaration, report, claim for refund,
or
information return or statement relating to Taxes, including any
schedule,
attachment or amendment.
"TRANSACTION DOCUMENTS" means all documents and agreements to be
entered
into
by one or more of the Parties in connection with the
transactions
contemplated by this Agreement.
Additionally, the following terms will have the meanings defined
for such
terms in the corresponding Sections of this Agreement as set forth
below:
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TERM
SECTION
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"AGREEMENT"
Preface
"BUYER"
Preface
"BUYER SEC DOCUMENTS"
3.21(g)
"BUYER'S DISCLOSURE SCHEDULE"
4
"CLOSING"
2.3
"CLOSING DATE"
2.3
"FINANCIAL STATEMENTS"
3.7
"HIRED EMPLOYEE"
5.6
"INDEMNIFIED PARTY"
7.4
"INDEMNIFYING PARTY"
7.4
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TERM
SECTION
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"MOST RECENT FINANCIAL STATEMENTS" 3.7
"MOST RECENT FISCAL MONTH END"
3.7
"MOST RECENT FISCAL YEAR END"
3.7
"NON-COMPETITION AGREEMENTS"
6.1
"PARTY" and "PARTIES"
Preface
"PURCHASE PRICE"
2.3
"SELLER"
Preface
"SELLER'S DISCLOSURE SCHEDULE"
3
"THIRD PARTY CLAIM"
7.4
"TRANSFER"
3.21
</TABLE>
2. BASIC
TRANSACTION.
2.1
PURCHASE AND SALE OF
ASSETS. On the terms and subject to the
conditions of this Agreement, on the Closing Date the Buyer
will
purchase from the Seller, and the Seller will sell, transfer,
convey
and deliver to the Buyer, the Acquired Assets, free and clear of
all
Security Interests, in exchange for the Purchase Price.
2.2
NO ASSUMPTION OF
LIABILITIES. Except for the Assumed Liabilities, the
Buyer will not assume or otherwise become responsible for any
Liabilities of the Seller at the Closing.
2.3
PURCHASE PRICE. On the
Closing Date, the Buyer will deliver 429,000
shares of Innuity Stock to the Seller (the "PURCHASE PRICE").
2.4
THE CLOSING. The
closing of the transactions contemplated by this
Agreement (the "CLOSING") will take place at the offices of
Gray,
Plant, Mooty, Mooty & Bennett, P.A., in Minneapolis, Minnesota,
at
9:00 a.m., on the second business day after the respective
Parties
have satisfied or waived all conditions to the obligations of
the
Parties to consummate the transactions contemplated by this
Agreement
(other than actions the Parties will take at the Closing itself)
or
any other time and date as the Parties may agree (the "CLOSING
DATE").
2.5
ALLOCATION. The
Parties will allocate the Purchase Price and all other
capitalizable costs among the Acquired Assets for all purposes,
including financial accounting and tax purposes, in accordance
with
the allocation schedule to be determined by the Parties at the
Closing.
3.
REPRESENTATIONS AND WARRANTIES OF THE SELLER. The Seller, jointly
and
severally, represents and warrants to the Buyer that the
statements
contained in this Section 3 are correct and complete as of the date
of this
Agreement and will be correct and complete as of the Closing Date,
except
as
set forth in the attached disclosure schedule accompanying this
Agreement (the "SELLER'S DISCLOSURE SCHEDULE"). The Seller's
Disclosure
Schedule will be arranged in paragraphs corresponding to the
sections
contained in this Section 3.
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3.1
ORGANIZATION,
QUALIFICATION AND POWER. The Seller is a limited
liability company duly organized, validly existing and in good
standing under the laws of the State of Nevada. The Seller is
duly
authorized to conduct business and are in good standing under the
Laws
of each jurisdiction where such qualification is required. The
Seller
has full corporate power and authority and all Permits necessary
to
carry on the businesses in which it is engaged and in which it
presently propose to engage, and to own and use the properties
owned
and used by it.
3.2
AUTHORIZATION OF
TRANSACTION. The Seller has full power and authority
(including full limited liability company power and authority)
to
enter into and perform its obligations under this Agreement and
the
Transaction Documents to which it is a party. The managing member
of
the Seller has duly authorized the execution, delivery and
performance
of this Agreement and the Transaction Documents to which the Seller
is
a party. This Agreement and the Transaction Documents to which
the
Seller is a party constitute valid and legally binding obligations
of
the Seller, as applicable, enforceable in accordance with their
respective terms and conditions.
3.3
NONCONTRAVENTION.
Except as set forth on Section 3.3 of the Seller's
Disclosure Schedule, neither the execution and the delivery of
this
Agreement or the Transaction Documents to which the Seller is a
party,
nor the consummation of the contemplated transactions: (a) will
violate any Law to which the Seller is subject; (b) will violate
any
provision of the articles or certificate of organization,
limited
liability company agreement, member control agreement,
operating
agreement or other organizational documents of the Seller; (c)
will
conflict with, result in a breach of, constitute a default
under,
result in the acceleration of, create in any party the right to
accelerate, terminate, modify or cancel, or require any notice
or
consent under any agreement, contract, lease, license, instrument
or
other arrangement to which the Seller is a party or by which he or
it
is bound or to which any of his or its assets are subject (or
result
in the imposition of any Security Interest upon any of his or
its
assets); (d) requires the Seller to give any notice to, make
any
filing with, or obtain any authorization, consent or approval of
any
Governmental Authority in order for the Parties to consummate
the
transactions contemplated by this Agreement and the Transaction
Documents; or (e) will result in the cancellation, forfeiture,
revocation, suspension or adverse modification of any Permit owned
or
held by the Seller.
3.4
BROKERS' FEES. Seller
has no Liability or obligation to pay any fees
or commissions to any broker, finder or agent with respect to
the
transactions contemplated by this Agreement for which the Buyer
could
become
liable or obligated.
3.5
TITLE TO ASSETS. The
properties and assets used by the Seller, located
on his or its premises, or shown on the Most Recent Balance Sheet
or
acquired after the date of the Most Recent Balance Sheet are free
and
clear of all Security Interests, except for properties and
assets
disposed of in the Ordinary Course of Business
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since the date of the Most Recent Balance Sheet. The Seller has
good
and marketable title to or a valid leasehold interest in such
properties and assets, including the Acquired Assets, free and
clear
of any Security Interest or other restriction on transfer.
3.6
MEMBERS; SUBSIDIARIES.
The membership interests of the Seller are held
by the owners of record set forth on Section 3.6 of the
Seller's
Disclosure Schedule. The Seller does not have any subsidiaries
and
does not otherwise control, own directly or indirectly, or have
any
equity participation directly or indirectly in any Person.
3.7
FINANCIAL STATEMENTS.
Attached to Section 3.7 of the Seller's
Disclosure Schedule is the following financial information related
to
the operations of the Seller's (the "FINANCIAL STATEMENTS"):
(a)
unaudited balance sheets and statements of income as of and for
the
fiscal year ended December 31, 2005 (the "MOST RECENT FISCAL
YEAR
END"); and (b) unaudited balance sheets and statements of income
(the
"MOST RECENT FINANCIAL STATEMENTS") for the five months ended June
30,
2006, (the "MOST RECENT FISCAL MONTH END") for the Seller. The
Financial Statements are true, complete and correct. No
Material
Adverse Effect has occurred to the businesses of the Seller since
the
Most Recent Financial Statements. Further, Section 3.7 of the
Seller's
Disclosure Schedule lists all Liabilities of the Seller that are
not
otherwise set forth on the Financial Statements.
3.8
EVENTS SUBSEQUENT TO
MOST RECENT FISCAL YEAR END. Since the Most
Recent Fiscal Year End, there have been no changes in the
assets,
business, financial condition, operations, results of operations,
or
future prospects of the Seller that individually or in the
aggregate
would have a Material Adverse Effect on the Seller.
3.9
UNDISCLOSED
LIABILITIES. Except as set forth on Section 3.9 of the
Seller's Disclosure Schedule, the Seller does not have any
Liability
(and there is no basis for any present or future action, suit,
proceeding, hearing, investigation, charge, complaint, claim or
demand
against it giving rise to any Liability), except for: (a)
Liabilities
set forth on the Most Recent Balance Sheet (rather than in its
notes);
and (b) Liabilities that have arisen after the Most Recent
Fiscal
Month End in the Ordinary Course of Business (none of which
results
from, arises out of, relates to, is in the nature of or was caused
by
any breach of contract, breach of warranty, tort, infringement
or
violation of Law).
3.10
TAX MATTERS. The Seller has filed all required Tax Returns. The
Seller
is treated as a partnership for Tax purposes, including federal
and
state income Tax purposes. All such Tax Returns were correct
and
complete in all respects. All Taxes owed by the Seller (whether or
not
shown on any Tax Return) have been paid. Except as set forth in
Section 3.10 of the Seller's Disclosure Schedule, the Seller is
not
currently the beneficiary of any extension of time within which
to
file any Tax Return. No claim has ever been made that the Seller is
or
may be subject to taxation by a jurisdiction where it does not
file
Tax Returns. No assets of the
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Seller have a Security Interest that arose in connection with
any
failure (or alleged failure) to pay any Tax.
3.11
REAL PROPERTY. The Seller does not own any real property. Section
3.12
of the Seller's Disclosure Schedule lists and describes briefly
all
real property leased or subleased to the Seller. The Seller has
delivered to the Buyer correct and complete copies of the leases
and
subleases listed in Section 3.12 of the Seller's Disclosure
Schedule.
Except as set forth on Schedule 3.12 of the Seller's Disclosure
Schedule, (a) the lease or sublease is legal, valid, binding,
enforceable and in full force and effect; (b) the lease or
sublease
will continue to be legal, valid, binding, enforceable and in
full
force and effect on identical terms following the consummation of
the
contemplated transactions; (c) no party to the lease or sublease is
in
breach or default, and no event has occurred that, with notice
or
lapse of time, would constitute a breach or default or permit
termination, modification or acceleration; (d) the Seller has
not
assigned, transferred, conveyed, mortgaged, deeded in trust or
encumbered any interest in the leasehold or subleasehold; (e)
all
facilities leased or subleased have received all required approvals
of
governmental authorities (including Permits) and have been
operated
and maintained in accordance with applicable Laws; and (f) all
facilities leased or subleased are supplied with utilities and
other
services necessary for the operation of the facilities.
3.12
INTELLECTUAL PROPERTY.
(a) The Seller owns or
has the right to use pursuant to license,
sublicense, agreement or permission all Intellectual Property
necessary for the operation of the businesses of the Seller as
presently conducted and as presently proposed to be conducted.
Each item of Intellectual Property owned or used by the Seller
immediately before the Closing will be owned or available for
use
by the Buyer on identical terms and conditions immediately
after
the Closing. The Seller has taken all necessary action to
maintain and protect each item of Intellectual Property that it
owns or uses.
(b) The Seller has not
interfered with, infringed upon,
misappropriated or otherwise come into conflict with any
Intellectual Property rights of third parties. The Seller has
never received any charge, complaint, claim, demand or notice
alleging any such interference, infringement, misappropriation
or
violation (including any claim that the Seller must license or
refrain from using any Intellectual Property rights of any
third
party). As of the Closing Date no third party has interfered
with, infringed upon, misappropriated or otherwise come into
conflict with any Intellectual Property rights of the Seller.
(c) Section 3.12(c) of
the Seller's Disclosure Schedule identifies
the following: (i) each patent or registration that has been
issued to the Seller for any Intellectual Property; (ii) each
pending patent application or
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application for registration that the Seller has made for any
of
its Intellectual Property; (iii) each license, agreement or
other
permission that the Seller has granted to any third party with
respect to Intellectual Property (together with any
exceptions);
and (iv) each trade name or unregistered trademark used by the
Seller in connection with any of its businesses.
(d) The Seller has
delivered to the Buyer correct and complete copies
of all such patents, registrations, applications, licenses,
agreements and permissions (as amended to date) listed in
Section
3.12(c) of the Seller's Disclosure Schedule and have made
available to the Buyer correct and complete copies of all other
written documentation evidencing ownership and prosecution (if
applicable) of each item. With respect to each item of
Intellectual Property required to be identified in Section
3.12(c) of the Seller's Disclosure Schedule: (i) a Seller
possesses all right, title and interest in and to the item,
free
and clear of any Security Interest, license or other
restriction;
(ii) the item is not subject to any outstanding injunction,
judgment, order, decree, ruling or charge; (iii) no action,
suit,
proceeding, hearing, investigation, charge, complaint, claim or
demand is pending or, to the Knowledge of either of the
managers,
members and employees with responsibility for Intellectual
Property matters of the Seller, is threatened that challenges
the
legality, validity, enforceability, use or ownership of the
item;
and (iv) the Seller has never agreed to indemnify any Person
for
or against any interference, infringement, misappropriation or
other conflict with respect to the item.
(e) Section 3.12(e) of
the Seller's Disclosure Schedule identifies
each item of Intellectual Property that any third party owns
and
that the Seller uses pursuant to license, sublicense, agreement
or permission. The Seller has delivered to the Buyer correct
and
complete copies of all such licenses, sublicenses, agreements
and
permissions (as amended to date).
(f) With respect to
each item of Intellectual Property required to be
identified in Section 3.12(e) of the Seller's Disclosure
Schedule: (i) the license, sublicense, agreement or permission
covering the item is legal, valid, binding, enforceable and in
full force and effect; (ii) the license, sublicense, agreement
or
permission will continue to be legal, valid, binding,
enforceable
and
in full force and effect on identical terms following the
consummation of the contemplated transactions; (iii) no party
to
the license, sublicense, agreement or permission is in breach
or
default, and no event has occurred that, with notice or lapse
of
time, would constitute a breach or default or permit
termination,
modification or acceleration; (iv) no party to the license,
sublicense, agreement or permission has repudiated any
provision
thereof; (v) for each sublicense, the representations and
warranties set forth in subsections (i) through (iv) above are
true and correct for the underlying license; (vi) the
underlying
item of Intellectual Property is not subject to any outstanding
injunction,
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judgment, order, decree, ruling or charge; (vii) no action,
suit,
proceeding, hearing, investigation, charge, complaint, claim or
demand is pending or, to the Knowledge of either of the
managers,
members and employees with responsibility for Intellectual
Property matters of the Seller, is threatened that challenges
the
legality, validity or enforceability of the underlying item of
Intellectual Property; and (viii) the Seller has never granted
any sublicense or similar right with respect to the license,
sublicense, agreement or permission.
(g) To the Knowledge
of any of the managers, members and employees
with responsibility for Intellectual Property matters of the
Seller, the Seller will not interfere with, infringe upon,
misappropriate or otherwise come into conflict with, any
Intellectual Property rights of third parties as a result of
the
continued operation of their businesses as presently conducted
and as presently proposed to be conducted.
(h) None of the
managers, members and employees with responsibility
for Intellectual Property matters of the Seller has any
Knowledge
of any new products, inventions, procedures or methods of
manufacturing or processing that any competitors or other
Persons
have developed that reasonably could be expected to supersede
or
make obsolete any product or process of the Seller.
(i) Except as set
forth on Section 3.14(i) of the Seller's Disclosure
Schedule, the Seller owns all components included in the
Software
and the Software contains no freeware, shareware or other open
source free or public domain software. Section 3.14(i) of the
Seller's Disclosure Schedule identifies all ancillary software
necessary to use the Software. The Seller has no obligation to
make any payment with respect to the use of the freeware
identified on Section 3.14(i) of the Seller's Disclosure
Schedule. The Seller owns, possesses and controls all source
code, object code, documentation, benchmark tests, programmer
level documentation, user level documentation, specifications
and
other materials necessary for the use of the Software. Except
as
set forth on Section 3.14(i) of the Seller's Disclosure
Schedule,
no copies of the Software's source code, object code,
programmer
level documentation, user level documentation, benchmark tests
or
any other documentation relating to the Software have been
provided to any third parties. The Software is free of any
remote
or automatic disabling or recapture devices, passwords, master
access keys, security devices, trap doors or computer viruses.
The Software fully complies in all respects with the associated
documentation, including the description and documents attached
as SCHEDULE 1(A) to this Agreement, and such description and
documentation accurately and completely describes the operation
and use of the Software.
(j) Section 3.14(j) of
the Seller's Disclosure Schedule sets forth
the name of all Persons involved in the testing and development
of the Software and all
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Persons who have intellectual property assignment agreements,
whether with the Seller relating to the Software.
(k) All former and current employees,
consultants, contractors and
other Persons who have ever been involved in any aspect of the
design or creation of any of the Seller's Intellectual
Property,
including the Software, have executed valid and enforceable
written agreements that cause ownership to accrue to or that
assign to the Seller any and all rights to all Intellectual
Property, including inventions, improvements or discoveries,
whether patentable or not, made by them during their service to
the Seller. Correct and complete copies of all such written
agreements have been provided to the Buyer by the Seller prior
to
the date of this Agreement. No former or current employee,
consultant, contractor or other Person who has ever been
involved
in any aspect of the design or creation of any of the Seller's
Intellectual Property, including the Software, designed or
created any of the Seller's Intellectual Property, including
the
Software, on his or her own time or without the use of any
equipment, supplies, facilities or trade secret information of
the Seller.
(l) The Seller has
taken all steps necessary and appropriate to
protect and pre
